Audit: Fort Dodge library board put sizable donation "at risk"

A state audit concludes the Fort Dodge Library’s board of directors has put a sizable donation "at risk" by turning it over to a private foundation.

State Auditor Dave Vaudt says his staff couldn’t accurately determine the exact amount a local woman left the library in her will, as the money trail is so twisted.

"With the transfers of money and so forth, it’s been pretty hard to follow," Vaudt says.

However, the auditor believes Gwendolyn Scharfenberg’s bequest was in the seven-figure range. "From the documentation that we saw, yes, we thought it was probably in the range of $1.3 million," Vaudt says.

The Fort Dodge city attorney advised the city’s library board back in January of 2003 that they needed to directly oversee the investment, but that advice was ignored.

"What the library board of trustees did was decide to donate (the money) or transfer it to a foundation outside their control and even back at the time they were doing that, the city attorney told them that was not proper and they still have not made corrective action several years later," Vaudt says.

The auditor’s report is being turned over to the Webster County Attorney, who will determine whether to file misconduct charges against the members of the library board.

The state auditor calls it a "concerning" case. "Just because the library board of trustees has continued to not follow the advice of the legal experts," Vaudt says.

The report Vaudt released today also covers other matters involving the City of Fort Dodge. Citizens in Fort Dodge complained there were conflicts of interest in city work being done by two local engineering firms. The city’s mayor works for one of the firms and a man who had served as the interim city engineer works for the other.

Vaudt says the city council had taken some steps, but not enough.

"If you take a look at the details on the engineering contracts, the big thing was they were not going through a competitive bidding process that would help avoid conflicts of interest," Vaudt says. "…We made some recommendations based on the attorney general’s advice."

According to Vaudt, the City of Fort Dodge has agreed to abide by those competitive bidding rules when awarding contracts to engineering firms.

Finally, the audit report released today concludes the City of Fort Dodge was "not in compliance" with state law when it comes to Tax Increment Financing or "TIF" Districts which are designated to spur development in an area.

"What we’ve tried to do over the last several years is work with the legislature to clarify some of the TIF laws, but in this case, clearly, the process that they were used was collecting more in TIF revenue than they should have and so our recommendation was to review the balances and return to the county the appropriate amounts that they shouldn’t have received," Vaudt says. "And obviously the benefit to the rest of the county is that those taxes will be shared amongst those other entities rather than all going to the City of Fort Dodge."

Counties collect property taxes in Iowa and divide the money among public schools, community colleges, cities and other taxing districts in the county. In "TIF" districts, however, all the property taxes collected are turned over to the city in which the district is located and not shared with other taxing districts in that area.